China announces budget, and world stocks climb

Markets in Europe and Asia were both positively affected

Topics: From the Wires, Wall Street, Asia, Europe, Bangkok, China, National People's Congress, ,

BANGKOK (AP) — World stock markets rose Tuesday as investors registered approval for China’s spending priorities announced at its annual congress.

Markets in Hong Kong and mainland China drew encouragement from a speech by outgoing Premier Wen Jiabao and presentation of the country’s budget at the opening of the annual National People’s Congress, a ceremonial legislature.

Wen promised deficit spending to meet a growth target this year of 7.5 percent that is enshrined in the ruling Communist Party’s latest five-year development plan. Wen mentioned subsidies for agriculture and energy conservation and said the country was committed to fighting corruption and improving the environment. Wen also pledged to relax the credit supply, analysts said.

“I think that is good news for the banks. Either they will increase their quota for new loans or reduce the deposit reserve ratio. So that means boosting the money supply to support economic growth,” said Francis Lun, managing director of Lyncean Holdings in Hong Kong.

Lun also said he believes China’s leaders are aiming for something higher than the 7.5 percent growth target announced at the congress.

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European stocks opened higher. Britain’s FTSE 100 rose 0.7 percent to 6,389.41. Germany’s DAX advanced 1.3 percent to 7,792.15 and France’s CAC-40 added 1.2 percent to 3,755.54. Wall Street was poised to open higher, with Dow Jones industrial futures rising 0.2 percent to 14,143 and S&P 500 futures advancing 0.2 percent to 1,528.10.

Earlier in Asia, Hong Kong’s Hang Seng rose 0.1 percent to 22,560.50. The mainland’s Shanghai Composite Index gained 2.3 percent to 2,326.31. The Shenzhen Composite Index added 2.3 percent to 964.68.

Stocks in Tokyo rose on hopes that the Bank of Japan, which begins a two-day meeting on Wednesday, might demonstrate a shift in monetary policy to conform to the program championed by new Prime Minister Shinzo Abe. The Nikkei 225 index advanced 0.3 percent to 11,683.45, its highest close since September 2008.

Australia’s S&P/ASX 200 gained 1.3 percent to 5,075.40 amid bargain-hunting after a sharp sell-off the day before.

Among individual stocks, Japan’s Fast Retailing jumped 5.5 percent after the company said sales at its Uniqlo casual clothing stores jumped 9.6 percent in February from a year ago, Kyodo News Agency said.

Wall Street stocks finished higher Monday as investors put aside the uncertainty over a budget battle in Washington. President Barack Obama and his political opponents have failed so far to agree on a way to roll back automatic spending cuts that took effect Friday. Those cuts slash $85 billion from the nation’s budget, which could slow down the economy.

Benchmark oil for April delivery was up 47 cents to $90.60 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 56 cents to finish at $90.12 a barrel on the Nymex on Monday.

In currencies, the euro rose to $1.3060 from $1.3022 late Monday in New York. The dollar fell to 93.01 yen from 93.42 yen.

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Follow Pamela Sampson on Twitter at http://twitter.com/pamelasampson

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